Japans claim to the Senkaku/Diaoyu islands go back to the 19th century,

when on 14th January 1895, Japan erected a sovereignty marker, thereby

formally incorporating the islands into Japanese territory. Prior to this, Japan
states that it surveyed the islands for ten years and determined they were
uninhabited.
For most of the past 120 years, Japan exercised control over the islands.
Post-World War II, for a brief period they came under control of the USA after
the 1951 Treaty of San Francisco. In 1971 under the Okinawa Reversion Deal
they were returned to Japan. Aside from this, they have been privately
owned by a series of Japanese citizens and it was only in 2012 that the
Japanese government reached a deal to buy three of the islands from the
owner. Japan argues that China did not raise any objections to Okinawa
Reversion and has only shown interest in these islands since surveys in the
1970s indicated a possibility of oil resources in the area.
Discussion among the countries of East Asia on how to define the proper
demarcation of maritime boundaries raised questions on establishing claims
based on the geological characteristics of the seabed below. Japans claims
were based on a negotiated median line between the territorial waters of
Japan and China UNCLOS allows for both their respective EEZs to cover 200
nautical miles. However, the width of the East China Sea is only 360 nautical
miles, thus there was a need for a median line. China refuted this and the
conflict between Japan and China intensified in the 21st century as Chinese
research vessels conducted surveys on the geological formations under the
disputed sea while at the same time increasing its oil and gas explorations
off shore.
Japan has been calling on China to halt its activities in the East China Sea
and accuses it of taking unilateral decisions in a disputed area despite
agreements to maintain cooperation. Repeated intrusions into Japans EEZ and

territorial waters by Chinese research ships prompted protests irked by Chinas

lack of response, the Japanese government began its own discussion about Japans
inability to act. Within several years, the Japanese maritime policy was revamped
the Ocean Orbis Law (2007) articulated a national ocean policy and reorganized the
responsibility for acting on Japans maritime interest. A new bureau regarding
exactly this brought together a set of concerns including national defense, maritime
policing and resource development.

The strategic intent of Japans government seems to adopt a regional approach to

maritime security, while working together with United States and others to develop
a plan to contain China's rising territorial assertiveness. However, Japan is not in a
position to let go of the other economic benefits it derives from its relations with
China. With China adopting an increasingly aggressive approach, Japan is faced
with a diplomatic predicament that threatens it economically as well as in terms of
defence and security.

Sources:

http://www.cfr.org/japan/japan-east-china-sea-dispute/p28795
http://www.bbc.com/news/world-asia-pacific-11341139